P-Cards: The End of Private Label?

P-Cards offer commercial customers the convenience of universal card acceptance, line-item purchasing details (when merchants are capable of supplying them), and rebates typically ranging from 0.5% to 1.5% of total card spend. With all these benefits, it’s no surprise that P-Card use in the U.S. has grown substantially over the past 5 years.

Does this surge in P-Card popularity signify the end for private label commercial cards? Absolutely not! Commercial Payments International published a paper in October discussing some of the reasons merchants in particular are not in love with P-Cards.

These are the top three issues I see facing P-Card adoption:

1. Risk. Yes, P-Cards offer customers the convenience of universal card acceptance, but with universal card acceptance comes an increased risk of fraud and card misuse. As evidenced by the thousands of private label commercial cardholders, many companies simply aren’t comfortable with the risks involved in issuing P-Cards to all employees.
2. Reporting. While P-Cards can offer line-item purchasing details, the line-item details collected through interchange are uniform. As a product designed for universal use and acceptance, P-Cards cannot support any deviation from this standard. And all too often, this standard falls short of the commercial customer’s needs. A private label card, however, gives a supplier the flexibility to develop its own unique standard to suite its business and its commercial customer base.
3. Cost. While P-Cards often offer cardholders attractive rebates, they offer merchants a much less attractive financial model. P-Cards are typically assessed the highest interchange rates of all card types, with some costing suppliers as much as 5.00% of the total sales amount. With price tags like this, many suppliers cannot afford to offer P-Card users their most competitive pricing, and their commercial customers are listening.